Australia’s competition watchdog has granted Qantas and China Eastern authorisation for joint operations despite issuing a draft denial earlier this year.
The Australian Competition and Consumer Commission (ACCC) announced this morning that it would allow the two airlines to operate joint flights between Australia and China.
Authorisation comes less than five months after releasing a draft determination proposing to deny approval on the basis that it would hamper competition between the two countries.
The Commission said that since March, Qantas and China Eastern have made ‘significant commitments’ to add additional frequencies and destinations between Australia and China. This includes a 21 percent increase in capacity on flights to Shanghai over five years.
China Eastern also proposed to increase the frequencies of its services on routes between Shanghai and Sydney, Melbourne and Cairns during peak periods and introduce year round services on a new route – the details were provided to the ACCC confidentially.
The agreement will also see co-location of Qantas with China Eastern at Terminal 1 at Shanghai Pudong International airport.
Chairman Rod Sims explained that with the new commitment the partnership would ‘constitute a significant public benefit’ by ensuring the relationship doesn’t result in a reduction in frequency and competition.
“The ACCC does not consider that capacity additions that simply keep pace with historical levels of growth are sufficient to demonstrate that the alliance will result in significant public benefits.”
Rod Sims, ACCC Chairman
“The ACCC accepts that Qantas and China Eastern do not want to commit to additional capacity expansion until closer to the time that capacity will be added.
“However, the ACCC expects that successful implementation of the gateway strategy underpinning their public benefit arguments should result in significant additional growth in capacity above that required by the conditions the ACCC has imposed over the term of the authorisation.
“If this were to prove not to be the case, it may be difficult for the ACCC to accept that the alliance facilitates the addition of new frequencies and destinations, and the development of Shanghai as a gateway to greater China for Qantas and China Eastern, in any application for re-authorisation.”
Qantas Group CEO, Alan Joyce welcomed the decision, saying it will help the airlines deliver a better travel experience for the growing number of customers travelling between the two countries.
“By working with China Eastern we are able to maximise Qantas’ presence throughout China and build a more sustainable platform for future growth such as opening up new routes from Australia to Shanghai.”
Alan Joyce, Qantas CEO
“We cannot fly to every destination in China. However our deepened relationship with China Eastern supports our successful strategy to work with key partners around the world to offer the most comprehensive network and world class travel experiences for our customers.”